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June 17 — The Equal Employment Opportunity Commission may pursue a “pattern or practice” discrimination
claim under Section 706 of Title VII of the 1964 Civil Rights Act and potentially
shift the burden to employers to disprove bias at the remedial stage, the U.S. Court
of Appeals for the Fifth Circuit has ruled (
EEOC v. Bass Pro Outdoor World, LLC, 5th Cir., No. 15-20078, 6/17/16
).

The court in a much-anticipated decision said the EEOC can employ the bifurcated trial
framework set out in
Teamsters v. United States, 431 U.S. 324, 14 FEP Cases 1514 (1977), even when it sues under Section 706, which permits the agency to seek compensatory
and punitive damages for intentional discrimination.

Employers had argued the EEOC could pursue pattern-or-practice claims only under Section
707 of the act, which limits remedies to injunctive and declaratory relief. But the
decision gives the EEOC greater flexibility in developing and litigating pattern-or-practice
claims while also allowing the agency to seek Section 706 damages under the
Teamsters framework.

“Congress did not prohibit the EEOC from bringing pattern or practice suits under
Section 706 and, in turn, from carrying them to trial with sequential determinations
of liability and damages in a bifurcated framework,” Judge Patrick E. Higginbotham
wrote.

It's “profoundly disappointing” the court endorsed the EEOC's argument that a pattern-or-practice
case can be pursued under Section 706, said Rae Vann, general counsel of the Equal
Employment Advisory Council in Washington, an employer association that filed an amicus
brief supporting Bass Pro Outdoor World LLC.

Allowing such “hybrid”
lawsuits effectively grants the EEOC “the best of both worlds”
by allowing it to shift the burden to employers under Section 707's bifurcated proof
scheme while pursuing compensatory and punitive damages under Section 706, Vann told
Bloomberg BNA June 17.

The decision likely will “only embolden” the EEOC to pursue pattern-or-practice lawsuits
without previously identifying the putative victims of the discrimination, she said.
It will “place enormous pressure on corporate defendants to settle” such cases regardless
of the merits, said Vann, a partner with NT Lakis LLP in Washington.

The EEOC is “pleased”
with the ruling and looks forward to “having the merits of this important race and
national origin hiring case heard” in district court, an agency spokeswoman said June
17.

Ruling on Interlocutory Appeal

The EEOC's lawsuit against Bass Pro stems from a “commissioner's charge” stating there
was “reason to think” the retailer discriminated against black applicants and employees
at its stores nationwide. In an amended charge, the EEOC expanded its allegations
to include Hispanic applicants and employees, alleging Bass Pro failed to recruit
and hire racial minorities for all positions.

The EEOC in 2010 determined it had “good cause” to believe the allegations against
Bass Pro were true. The EEOC engaged in conciliation, or attempts to settle the charge,
telling Bass Pro the agency had identified an estimated 100 individuals who were discrimination
victims. But the EEOC didn't provide specific names of any alleged discrimination
victims. The agency declared conciliation unsuccessful and it sued Bass Pro in 2011
under both Section 706 and Section 707, alleging a pattern or practice of discriminatory
hiring against black and Hispanic applicants.

The EEOC said it intended to proceed under the
Teamsters framework and it didn't identify specific aggrieved individuals.

In
Teamsters, the U.S. Supreme Court said when a class alleges a “broad-based policy of employment
discrimination,” the class may pursue its “pattern or practice” claim in a bifurcated
proceeding. In the first stage, plaintiffs must establish unlawful discrimination
has been an employer's “standard operating procedure.”

If the plaintiffs meet their initial burden of proving a pattern or practice, then
a subsequent remedial phase determines the “scope of individual relief,”
the court said. During the remedial phase, a plaintiff need only show he unsuccessfully
applied for a job to raise a prima facie case of discrimination and the employer must
prove the applicant was denied for lawful reasons.

Under Supreme Court precedent, the EEOC doesn't need to satisfy the class action requirements
in Rule 23 of the Federal Rules of Civil Procedure when it brings pattern-or-practice
claims.

Instead, the court in
Teamsters said, “Congress intended to endow the EEOC with broad enforcement authority outside
the confines of Rule 23 because ‘[w]hen the EEOC acts, albeit at the behest of and
on behalf of specific individuals, it acts also to vindicate the public interest in
preventing employment discrimination.' ”

Bass Pro moved to dismiss the case, arguing the EEOC may not bring a pattern-or-practice
claim under Section 706 and that the commission can't use the
Teamsters bifurcated framework to prove a Section 706 claim.

The U.S. District Court for the Southern District of Texas initially agreed and dismissed
the EEOC's first complaint.

But in 2014, the district court ruled the EEOC could pursue a pattern-or-practice
claim under Section 706. Bass Pro filed an interlocutory appeal with the Fifth Circuit.

No Constitutional Bar

The appeals court said that although Section 706 doesn't “explicitly authorize”
pattern-or-practice claims, Congress has given the agency “broad enforcement powers”
to eradicate employment discrimination. The Supreme Court historically has expressed
reluctance to subject Section 706 actions to “requirements that might disable”
the EEOC “from advancing the public interest,” the Fifth Circuit said.

Congress was aware of that Supreme Court precedent in 1991 when it expanded Section
706 remedies to include compensatory and punitive damages, the court said.

Nothing in Title VII's language or the relevant Supreme Court cases forecloses an
EEOC pattern-or-practice claim under Section 706, the Fifth Circuit decided.

Bass Pro argued that applying the
Teamsters model for proving pattern or practice to Section 706 cases would violate its due
process and Seventh Amendment jury trial rights.

But the court said “the pressure to settle that attends such extensive litigation”
would be present regardless of whether EEOC pattern-or-practice claims are brought
under Section 707 or Section 706.

The employer's argument also ignores that the EEOC takes risks in pursuing a
Teamsters strategy as the agency faces the heightened burden of showing discrimination is an
employer's normal procedure, the court said.

The Fifth Circuit acknowledged courts may face some challenges in managing such an
EEOC lawsuit. But it said employers and courts have sufficient tools available under
the Federal Rules of Civil Procedure to ensure employers effectively challenge both
liability and damages in the separate trial phases.

Bass Pro argued the EEOC in this case failed to satisfy its pre-lawsuit investigation
and conciliation requirements. But the court said under the standard set out in
Mach Mining LLC v. EEOC, 135 S. Ct. 1645, 126 FEP Cases 1521 (U.S. 2015), the EEOC fulfilled its obligation to try to settle the pattern-or-practice claim
prior to suit.

Judges Leslie H. Southwick and Stephen A. Higginson joined in the decision.

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